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Squid and Digest Authentication
Digest AuthenticationDigest Authentication hashes the password before transmitting over the wire. Essentially it sends a message digest generated from multiple items including username, realm and nonce value. If you want to know more see (RFC 2617).
Thing to remember is both Basic and Digest are on the weak end of the authentication security spectrum. If your only choice is Basic and Digest, the lesser of two evils is Digest.
Digest is very similar to Basic from a configuration perspective. Squid uses an external helper program to facilitate the authentication process. From a Squid configuration perspective, the following pieces are required in the